Correlation Between Great-west and Vanguard Small-cap
Can any of the company-specific risk be diversified away by investing in both Great-west and Vanguard Small-cap at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Great-west and Vanguard Small-cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Great West Sp Small and Vanguard Small Cap Index, you can compare the effects of market volatilities on Great-west and Vanguard Small-cap and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Great-west with a short position of Vanguard Small-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great-west and Vanguard Small-cap.
Diversification Opportunities for Great-west and Vanguard Small-cap
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Great-west and Vanguard is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding GREAT-WEST SP SMALL and VANGUARD SMALL-CAP INDEX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Small-cap Index and Great-west is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Great West Sp Small are associated (or correlated) with Vanguard Small-cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Small-cap Index has no effect on the direction of Great-west i.e., Great-west and Vanguard Small-cap go up and down completely randomly.
Pair Corralation between Great-west and Vanguard Small-cap
Assuming the 90 days horizon Great-west is expected to generate 1.54 times less return on investment than Vanguard Small-cap. In addition to that, Great-west is 1.03 times more volatile than Vanguard Small Cap Index. It trades about 0.03 of its total potential returns per unit of risk. Vanguard Small Cap Index is currently generating about 0.05 per unit of volatility. If you would invest 8,496 in Vanguard Small Cap Index on December 29, 2023 and sell it today you would earn a total of 2,414 from holding Vanguard Small Cap Index or generate 28.41% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 99.77% |
Values | Daily Returns |
GREAT-WEST SP SMALL vs. VANGUARD SMALL-CAP INDEX
Performance |
Timeline |
Great-west Sp Small |
Vanguard Small-cap Index |
Great-west and Vanguard Small-cap Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Great-west and Vanguard Small-cap
The main advantage of trading using opposite Great-west and Vanguard Small-cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great-west position performs unexpectedly, Vanguard Small-cap can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Vanguard Small-cap will offset losses from the drop in Vanguard Small-cap's long position.Great-west vs. USCF Gold Strategy | Great-west vs. Great West Lifetime 2020 | Great-west vs. Great West Lifetime 2020 | Great-west vs. Great West Lifetime 2020 |
Vanguard Small-cap vs. USCF Gold Strategy | Vanguard Small-cap vs. Vanguard Materials Index | Vanguard Small-cap vs. Vanguard Limited Term Tax Exempt | Vanguard Small-cap vs. Vanguard Limited Term Tax Exempt |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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